Payday loan debate postponed after heated argument

The Senate sponsor of a bill regulating payday loans agreed to delay his proposal, but not before suggesting that some fellow lawmakers were acting as “shills” for the short-term credit industry.

Sen. John Carona, R-Dallas, said he negotiated all night to win enough votes to bring the controversial measure to the floor, but some lawmakers balked at last-minute amendments, particularly one that would pre-empt city payday loan regulations for two years.

Sen. John Whitmire,D-Houston, argued that the amendment would preclude Houston officials from enacting an ordinance regulating short-term credit operations that have been criticized as trapping consumers in a cycle of debt by refusing partial payments of loans and charging expensive “roll-over” fees. Four other major Texas cities–Dallas, Austin, El Paso and San Antonio — have enacted ordinances limiting the size of loans and capping fees. Houston Mayor Annise Parker has said the city would consider enacting its own ordinance if the Legislature failed to act.

Carona hoped to extend similar, but less stringent, rules statewide. While some consumer groups have balked at retreating from stronger city regulations, Carona said his bill would save Texas consumers between $132 million and $220 million a year.

Thursday, he warned that the industry has hired “darn near every lobbyist” in Austin to “kill this bill.” When Sen. Troy Fraser, R-Horshoe Bay, asked for a delay, Carona at first refused, saying it would give lobbyists time coerce lawmakers into opposing it. “I know you did not come down here to be a shill for the payday lenders,” he told Fraser. He also warned the the Texas Republican Party was in danger of being depicted as under the influence of payday lenders, who gave more than $2 million in campaign contributions during the 2012 election cycle.

Late Thursday, Carona issued a statement that he would try again to pass the bill Monday, but noted that the payday industry was trying to kill it since he had added consumer-friendly amendments. If lawmakers fail to support his proposal, he said, “it will be a telling and unfortunate statement about the power the payday and auto title loan industry holds over the Texas Legislature.”